Gland Pharma IPO

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(i) They one of the fastest-growing generic injectables-focused companies by revenue in the United States from 2014 to 2019 (Source: IQVIA Report). They are present in sterile injectables, oncology, and ophthalmics, and focus on complex injectables, NCE-1s, First-to-File products, and 505(b)(2) filings. Gland Pharma is typically a B2B company.

Generic injectables are bio-equivalent of their branded counterparts which are not protected by drug patents. They are as safe and effective as the innovator drugs since they have similar active ingredients, dosage, strength, quality, form, etc.

(ii) They sell their products primarily under a business to business (“B2B”) model in over 60 countries as of March 31, 2020, including the United States, Europe, Canada, Australia, India, and the Rest of the world.

(iii) Gland Pharma was established in Hyderabad, India in 1978 and has expanded from liquid parenterals to cover other elements of the injectables value chain, including contract development, own development, dossier preparation, and filing, technology transfer, and manufacturing across a range of delivery systems.

(iv) They have a professional management team and one of the Promoters, Shanghai Fosun Pharma, is a global pharmaceutical major.

(v) Gland Pharma has seven manufacturing facilities in India, comprising four finished formulations facilities with a total of 22 production lines and three API facilities. As of March 31, 2020, they have manufacturing capacity for finished formulations of approximately 755 million units per annum.

(vi) As of March 31, 2020, Gland Pharma along with its partners had 265 ANDA filings in the United States, of which 204 were approved and 61 were pending approval. The 265 ANDA filings comprise 189 ANDA filings for sterile injectables, 50 for oncology and 26 for ophthalmics related products.

ANDA– An abbreviated new drug application (ANDA) contains data that is submitted to the FDA for the review and potential approval of a generic drug product.

Revenue Contributions Country-wise

Countries FY18 FY19 FY20
USA 71.25% 62.50% 66.74%
India 18.49% 18.97% 17.74%
Europe 3.39% 5.38% 4.44%
Canada 1.08% 1.12% 1.78%
Australia 0.69% 0.44% 0.50%
Rest of the world 5.10% 11.59% 8.80%

Objects of the Gland Pharma IPO:

(i) Offer for Sale (5229 Crores) The proceeds of the Offer for Sale shall be received by the Selling Shareholders. (ii) Fresh Issue (1250 Crores) The Company proposes to utilize the Net Proceeds towards the funding of the following objects: 1. Funding incremental working capital requirements. 2. Funding capital expenditure requirements. 3. General corporate purposes.

Gland Pharma IPO Details:

Open Date: Nov 09 2020
Close Date: Nov 12 2020
Total Shares: 4,31,96,968
Face Value: ₹ 1 Per Equity Share
Issue Type: Book Building
Issue Size: 6499 Cr.
Lot Size: 10 Shares
Issue Price: ₹ 1490-1500 Per Equity Share
Listing At: NSE,BSE
Listing Date: Nov 20 2020

Promoters And Management:

(i) Yiu Kwan Stanley Lau is the Chairman and Independent Director of our Company. He holds a bachelor’s degree in pharmacy from The School of Pharmacy, University of London. He is a director on the board of directors Solasia Pharma K. K. and TaiLai Bioscience Ltd. (ii) Srinivas Sadu is the MD and CEO of our Company. He holds a bachelor’s degree in pharmacy from Gulbarga University, a master’s degree in science from Long Island University, New York, and a master’s degree in business administration from University of Baltimore. He also holds a post-graduate certificate in finance and management from the London School of Business and Finance. He has previously worked at Natco Pharma Limited at Hyderabad, India, and is presently a director on the board of Sadu Advisory Services Private Limited. He has over 21 years of experience in business operations and management.

Financials of Gland Pharma IPO:

Particulars(in Million) Mar-18 Mar-19 Mar-20 3MFY21
Revenue 16,229 20,442 26,332 8,842
COGS 7,182 9,548 10,902 3,055
Stock in Trade 91 162 186 46
Change in Inventory -666 -1,141 -69 97
Employee Cost 1,790 2,229 2,776 723
Other Expense 2,476 2,576 2,980 792
EBITDA 5,356 7,068 9,557 4,129
OPM 33% 35% 36% 47%
Other Income 487 855 1,391 320
Interest Cost 42 36 71 4
Depreciation 783 821 945 242
Exceptional Item 0 200 0 0
Profit before tax 5,018 6,866 9,932 4,203
Tax 1,804 2,344 2,200 1,064
Net Profit 3,214 4,522 7,732 3,139
NPM 20% 22% 29% 36%
Shares 163.28 163.28 163.28 163.28
EPS in Rs 20 28 47 19
IZ View 1. Gland Pharma has shown excellent growth in both topline and bottom line in the last 3 years. The CAGR growth is approximately 27% in revenue and 55% in PAT. 2. The EBITDA Margin has also improved from 33% in 2016 to 47% in FY21. 3. The NPM has also improved from 20% to 36%. 4. The company is debt-free. The company in the last 3 years has generated a free cash flow of ~900 Crores. 5. If we annualized the 3MFY21 EPS then we can expect an EPS of ~75 for FY21. So, on that basis, the asking issue price is at P/E of 20x.

Comparison With Peers:

As per RHP there are no listed companies in India that engage in a business similar to that of the Company.

Recommendation on Gland Pharma IPO:

Review and Recommendation of InvestorZone are 6/10 Pros: 1. The company has shown excellent growth in the last 3 years. 2. The sector i.e. APIs in which the company is doing business is highly lucrative. 3. Company is debt-free and continuously generating free cash in the last 3 years. 4. The company has high ROCE and ROE. 5. Asking P/E on an annualized FY2021 basis is around 20x. 6. Listing gain of 15-20% is expected. Cons: 1. The issue size is very huge i.e. 6400 Crores. It means every retail investor will get a share in the IPO. So selling pressure will be seen on listing day. 2. Chinese promoter i.e. Fosun Singapore is holding 74% shares. With anti-Chinese sentiments might have a negative effect on the IPO. 3. Main revenue i.e. 67% comes from the US. So, US election results will be key for the stock in the future.

Registrar of Gland Pharma IPO:

  1. Link Intime India Private Limited

Discussion on Gland Pharma IPO:

    Today upper circuit.. Thanks Market Wizard… Happy Investments.. Enjoying profit..

    Congratulations to all those who applied in Gland.

    Listing at 1710

    Best wishes to all investors.. Dont worry stay connected… Dont panic Hold hold for long time..

    *Gland Pharma Ltd., – Basis Of Allotment*
    Ret : 0.192056×
    Full & Firm Allotment.
    HNI : 0.494470×
    Full & Firm Allotment.
    Price Fixed : Rs.1500
    Listing : BSE & NSE
    On Fri 20 Nov, 2020.

    As per discussion in the market, the listing could be around 1650-1700 range. Hold on the breath till listing.

      Yes… But don’t sell any single share… Partfolio share… Less quantity with retailers…monopoly business… Dont sell only hold… And sleep

      Good going.. Good company.. It will must open above IPO price.. Happy Investmenting Happy Diwali 🙏

    i didn’t not apply for it..last time unfortunately i bought uti amc and i am stuck with it..its better not go buy in ipo

    Gland Pharma
    All sellers.

    Buying temporarily halted right now.

    As per falling trend in GMP ( today around 20-40) most probably it is going to list in discount (around 1450).

    Valuation

    Revenues rose 29% to Rs 2633.24 crore and net profit rose 71% to Rs 772.86 crore in year ended March 2020.Revenues rose31% to Rs 884.21 crore in Q1FY21. Operating margins jumped 770 bps to 46.7% resulting into 57% increase in operating profits to Rs 412.62 crore. Net profit was up 71% to Rs 313.59 crore.

    At the higher price band of Rs 1500, the offer is made at around 31.7 times its FY 2020 EPS of Rs 47.4 on a post-issue equity share capital of Rs 16.33 crore of face value of Rs 1 each. There is no comparable listed player with mirror business. While, it is not unusual for a growing pharma company to command such valuations, the Chinese ownership may not be received well by the market, given the strong anti-China sentiments within India.

    The GMP has fallen sharply from 170 to 60 in Gland Pharma.

    Having said that, it is a quality company. It is like portfolio type stock.

    How big money is earned from the Stock market?

    1. Fosun Singapore holds 114,662,620 equity shares in Gland Pharma.

    2. Cost of acquisition is 605 per share in 2017.

    3. Now, in the IPO, fosun Singapore is selling 1,93,68,686 Equity shares. This means they are selling 17% shares in the IPO.

    4. Total Gain on Investment = (1500-605) * 1,93,68,686 = 1733 Crores.

    5. CAGR return of 35% in the last 3 years.

    Tentative dates are announced and same has been updated.

    Current GMP is 145

    Fosun Singapore holds 74% in the Gland Pharma pre-IPO.

    One of the promoters in Gland Pharma is Shanghai Fosun Pharmaceutical Co., Ltd., known as Fosun Pharmaceutical or just Fosun Pharma is a Chinese listed pharmaceutical company. It is majority-owned by Fosun International.

    Balance Sheet Analysis:

    1. No equity has been diluted in the last 3 years. Very Positive sign.

    2. Net-Worth as on 31.03.2020= 3646 Crores

    3. Debt as on 31.03.2020 = 4.9 Crores

    4. Debt/Equity = Negligible ( Debt Free Company)

    5. Current Ratio (FY20) = 7.92

    The company has an excellent Current Ratio. Anything above 2 is great for the business. This means the company will not have any liquidity issues in the short term.

    6. Receivables Days = 79 days for FY20. Anything less than 90 is good.

    7. ROE = 21% – Excellent

    Conclusion- The company has very strong balance sheet.